FIA EPTA appreciates the opportunity to provide feedback to the European Securities and Markets Authority (ESMA) on the consultation on the review of certain aspects of the Short Selling Regulation. FIA EPTA is of the view that short-selling bans are harmful to the orderly functioning of markets. We note the unnecessary operational risks that were a consequence of short selling bans implemented inconsistently and with limited lead-time last year. Moreover, we recall that the potential of bans, associated with its impact on liquidity and hedging, is likely to reduce attractiveness of EU financial markets. Short selling is often claimed to be depressing prices. Nonetheless, short-sellers also need to cover their positions and ultimately close their positions out. In effect, short-sellers are often the very few market participants that buy-in times of economic downturn. This points to the important role that short selling has in providing market liquidity.
